If the growth ambitions of the UK’s manufacturing SMEs were realised, the country would see a £83 billion boost in Gross Value Added (GVA) over the next decade, according to a report by MakeUK in partnership with Civitas and the ERA Foundation.
However, the report: The Growth Mission: A Blueprint for Scaling up SME Manufacturers, indicates that there are big barriers to this potential growth, with the top roadblocks including a lack of adequately skilled talent and continuing difficulty for smaller businesses to access finance in the early stages of growth.
SMEs are often regarded as the incubators of innovation in the UK with much of the total R&D spend taking place within the supply-chain, the report says.
The report, based on a survey of SME manufacturers, finds that 64% of those surveyed have an ambition to grow into a large company over the next 5-10 years. Boosting the manufacturing sector’s GVA through scaling up SMEs would lift the UK’s global position in manufacturing output to 7th in the world: the UK is currently in 12th position.
The report indicates that 48% of the SMEs surveyed intend to invest in labour and skills over the next 12 to 24 months. Other planned investments include plant and machinery (37%) and digital technologies (31%). While skills come out as the top priority for the SMEs, it is also the top barrier, with 49% of respondents saying that the lack of high skilled talent, and a lack of niche specialist skills, (44%) was hindering their growth.
Access to overseas markets also ranked highly in the survey with 37% of respondents citing this as a barrier to growth. “The incoming trade strategy for industry will be of great interest to the manufacturing sector which is eager to ease trade relations with the EU as well as build new relationships with businesses in other countries,” the report notes.
In the area of financial support, the report calls for a simplification of routes for access funding. “Our review into existing mechanisms of support across the UK found far in excess of 100 types of schemes and support systems available to support manufacturers and other industries," the rpport said. "Yet the sheer number of support initiatives can also be overwhelming for SMEs who do not have the resource and capacity to effectively research and identify which public support would be most beneficial for them to achieve their goals,” it says.
With the survey highlighting that 85% of SMEs would like to receive more targeted financial support between the seed and early growth stages of investment, the report calls for packages to assist these ambitions.
Many of the findings in this report are in line with SCI’s own survey of its science-based SME community which noted financial support and difficulty in finding the right skills as barriers to their growth and scale-up ambitions.
According to a separate SCI-commissioned analysis by LEK Consulting, putting in place a science-focused industrial strategy could create an additional £230bn in GVA and 240,000 jobs by 2030 in the life sciences and clean tech sectors alone, while job creation would take place in diverse locations, supporting the rebalancing of the economy from its dependence upon the south-east of England.
Further reading
• PwC poll: skills and education key to industrial strategy
• New Industrial Strategy will boost investment say business leaders
• UK Industrial Strategy: Russell Group assemble expert panel
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